Correlation Between Norske Skog and Elopak AS
Can any of the company-specific risk be diversified away by investing in both Norske Skog and Elopak AS at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Norske Skog and Elopak AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norske Skog Asa and Elopak AS, you can compare the effects of market volatilities on Norske Skog and Elopak AS and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Norske Skog with a short position of Elopak AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norske Skog and Elopak AS.
Diversification Opportunities for Norske Skog and Elopak AS
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Norske and Elopak is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Norske Skog Asa and Elopak AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elopak AS and Norske Skog is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Norske Skog Asa are associated (or correlated) with Elopak AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elopak AS has no effect on the direction of Norske Skog i.e., Norske Skog and Elopak AS go up and down completely randomly.
Pair Corralation between Norske Skog and Elopak AS
Assuming the 90 days trading horizon Norske Skog Asa is expected to under-perform the Elopak AS. In addition to that, Norske Skog is 3.96 times more volatile than Elopak AS. It trades about -0.04 of its total potential returns per unit of risk. Elopak AS is currently generating about -0.04 per unit of volatility. If you would invest 4,455 in Elopak AS on September 1, 2024 and sell it today you would lose (60.00) from holding Elopak AS or give up 1.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Norske Skog Asa vs. Elopak AS
Performance |
| Timeline |
| Norske Skog Asa |
| Elopak AS |
Norske Skog and Elopak AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norske Skog and Elopak AS
The main advantage of trading using opposite Norske Skog and Elopak AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norske Skog position performs unexpectedly, Elopak AS can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Elopak AS will offset losses from the drop in Elopak AS's long position.| Norske Skog vs. Hoegh Autoliners ASA | Norske Skog vs. Reach Subsea | Norske Skog vs. Elkem ASA | Norske Skog vs. Integrated Wind Solutions |
| Elopak AS vs. Elkem ASA | Elopak AS vs. Norske Skog Asa | Elopak AS vs. Kitron ASA | Elopak AS vs. Europris ASA |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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